Gijima to cut staff count by 10%
Gijima, the troubled JSE listed IT company, says its aims to make “minor retrenchments” by reducing its current headcount of 2,500 by around 250, or 10%.
Earlier this month, the group posted an interim loss of R123.36 million.
It bemoaned the expiry of a long term services contract, coupled with the decision by another long-term client to insource part of the services rendered by Gijima.
Shares in Gijima have declined from a high of 36 cents at the start of the year, and a year best of 53 cents.
On Monday, the group lost nearly 17% to 10 cents giving it a market cap of R96.4 million, shedding an additional cent on Tuesday (9 April).
Eileen Wilton, acting CEO told BusinessTech:
“The Gijima board and management team are extremely grateful to all the employees for their valuable contribution and commitment towards the renewed growth path envisaged by Gijima. We have all experienced the tough global economic conditions, but the valuable insights we as a team gained over the last few months will enable us to weather the storm.
“Nevertheless, Gijima had to minimise the headcount by means of: Freezing recruitment, the natural attrition is contributing to savings; Not renewing contractor assignments, where the skill is not essential; Exiting non-performing employees where its concluded that their performance cannot be turned around.
“Over and above this, there will be some minor retrenchments. Gijima expects to reduce its current headcount of 2,500 by around 250, with 70% of this process already completed.”
Wilton said that the group is confident that it is equipped and positioned for strong growth after a challenging operational period.
“Gijima has received a firm commitment from 80% of its top clients to continue their relationship. Gijima has a full complement of 1,037 clients,” it said after reporting its results.
Results
For the six months ended December 2012, Gijima reported a 23% decline in revenue from continuing operations.
Revenue from continuing operations was R911 million, down from R1.1 billion in 2011, and the operating loss from continuing operations was R123 million, after a R33 million operating profit in 2012.
This translated into a loss in headline earnings per share from continuing operations of 11.12 cents, compared with positive earnings of 1.47 cents in 2011.
Rights offer
Gijima is aiming to raise R150 million by way of a rights offer in order to re-capitalise the company, to ensure compliance with all of its funding covenants under the securitisation and to finance its working capital requirements.
The rights offer is expected to be concluded within the current financial year.
According to Keith McLachlan, a senior equities analyst of small-and mid-caps at Thebe Stockbroking, and financial blogger at SmallCaps.co.za, the rights offer is predominantly to inject equity into the business so as to shore up its Debt:Equity (D:E) ratio.
He said that about R50 million of the rights issue will go to paying debt back, but the group is expecting to remain geared.
“The day-to-day funding the of the business will come from cash earned from operations, debt and the remaining R100 million from the rights offer.”
Loading ...